Russian oligarchs flock to Britain with billions to spend and a taste for luxury

Russia has an estimated 33 dollar billionaires and 88,000 millionaires, many of whom now call London - or Moscow2 as it is known among their select group - home.

Lured by three-hour flights, relatively lax tax rules and Bond Street shops, oligarchs and their families are following in the footsteps of the Chelsea football club owner, Roman Abramovich, in setting up home in London.

Forbes magazine recently nicknamed the capital "Londongrad" because of its burgeoning Russian population.

There are an estimated 300,000 Russians living in Britain, and while they may not all have the £7bn spending power of Mr Abramovich, a substantial proportion still have a lot of cash to flash.

Such is the influence of the oligarchs that this week the jewellery designer Theo Fennell attributed a rise in profits to its burgeoning Russian client base. Sales have risen by 4.5 per cent in the past six months, at a time when high-street stores are experiencing tough trading conditions. Customers are keen to snap up the iconic outsize crosses, heart pendants and silverware which range in price, according to a spokeswoman, "from £1,000 to as many noughts as you want to add".

Justine Carmody, merchandising director, said: "We are focused on the design, rather than just churning out diamond solitaire rings one after another, and Russians are very discerning in that respect. They are also fun to deal with and will commission one-off pieces that are really distinctive."

The luxury department store Harvey Nichols employs six Russian-speaking assistants on its shop floors after seeing a rise in the number of high-spending oligarchs coming through its doors. Richard Gray, marketing manager, said: "The Russians are to this decade what the Japanese were to the Nineties and the Arabs were to the Eighties. They have a lot of money and are prepared to spend it, but they have real taste and are very specific about what they want.

"The women will come in with copies of Russian Vogue, wanting to be the first on the waiting list for the latest handbag or boots, and it is not unusual to see people regularly spending five-figure sums in one trip."

It is not just the designer fashion floors that have benefited from the Russian invasion of the store. The fifth-floor food hall has had to double orders of Caspian beluga caviar - the most expensive in the world at £146 for 50g - to keep up with the demand from predominantly Russian customers.

Fashion insiders even say that the current trend for floaty skirts and ruffled tops is not so much down to Sienna Miller's "boho" style as designers trying to court Russian women with the "Anna Karenina" look.

The faltering housing market is also being buoyed by sales to Russians for whom money is no object. Mr Abramovich bought a five-storey Georgian townhouse in Belgravia for £11m in June, while fellow oligarch Leonard Blavatnik snapped up a house in Kensington Palace Gardens for £41m.

Estate agents estimate that Russians make up a third of the buyers at the multimillion-pound top end of the London housing scene. Jonathan Hewlett, a sales director at the Knightsbridge office of the Savills agency, said: "Initially, Hampstead was very popular, but recently the Russians have been moving into more central parts of London, like Belgravia, Knightsbridge and Mayfair. They like big rooms and grand spaces, as well as very contemporary styles. They are also intensely private."

Red Square Projects was set up in London two years ago to cater for the whims of wealthy Russian expatriates. Those whims can come with a hefty price tag. After a conference of Russian business leaders in London last April, a group of delegates paid for a sumptuous dinner, washed down with vintage Dom Perignon champagne and £300 bottles of cognac. They also paid for Liza Minnelli to be flown out to sing to them for an hour. The cost of the dinner and entertainment is not known, but insiders say the final bill would have come to as much as £500,000.

Red Square is also helping another group of Russians who want to fly to Scotland by helicopter and spend a few days in a Highland castle. Their budget for the minibreak? £250,000.

A spokeswoman for Red Square said: "Immigration from Russia has come in three waves.

"At the beginning of the 20th century, people escaped the revolution and went to Paris, which became the most popular bolthole for Russians.

"Then in the 1970s a huge number of people went to Israel and the United States to escape Communism.

"Now Britain is the favourite place. Russians like the shops, the culture, the public schools and the houses. There isn't a shop on Bond Street that doesn't have a Russian speaker now."

She added: "London is also only three and a half hours by plane from Moscow, so people can live here but pop back for parties and to see friends and family."

The proximity has also seen the emergence of a new breed of commuter; the voskresnuy muzh or "Sunday husbands". These are men who work in Moscow but catch a Friday night flight to London where their family and home are based, before zipping back on a Sunday night red-eye to be in the office on Monday.

Another reason for Russia's new-found love affair with Britain is that it can prove to be a rather effective tax haven. While other European countries demand that residents pay tax on their worldwide income and capital gains, there is a UK loophole which allows people to set up offshore accounts in a way that avoids this duty. It means that oligarchs can sell their valuable stocks in Russia's industry and use the proceeds to buy a house without paying tax on the gain.

Between 1998 and 2004, more than $100bn (£57bn) flowed out of Russia, according to Forbes magazine. A substantial chunk of that is now being spent in the boutiques and estate agents of Britain.

At home in 'Londongrad'

* OLEG DERIPASKA

A friend of Roman Abramovich and known as the Aluminium King on account of the source of his fortune. The 36-year-old is worth an estimated £4bn and is Britain's sixth richest man. Technically still resident in Moscow, he is spending increasing amounts of time in London, where he recently bought a Grade I listed Regency house in Belgrave Square for £25m. Insiders believe he may move to Britain permanently, after being named the third most vulnerable businessman to the clampdown on oligarchs by the Russian President, Vladimir Putin. He is married to Polina, a Millfield School-educated Anglophile whose father was Boris Yeltsin's former chief of staff. A quiet and studious man, Mr Deripaska takes a private jet from Moscow to London every two weeks to attend English courses at the London School of Economics.

* LEONARD BLAVATNIK

The 47-year-old oil baron last year outbid Roman Abramovich to snap up a sumptuous house in Kensington Palace Gardens for £41m. The mansion has 10 bedrooms, nine bathrooms, accommodation for seven staff and a 35ft swimming pool. His private fortune is estimated at £3bn and he recently moved his base from the United States to Britain. Mr Blavatnik arrived in New York as an impoverished immigrant in 1978, and took up US citizenship after marrying his American wife, Anglicising his name from Leonid, but returned to Russia to take advantage of the business opportunities after the collapse of the Soviet Union. Investments in oil fields, copper and other businesses have made him fabulously wealthy. He is on the council of the Serpentine Gallery and is a benefactor of the Hermitage Rooms at the Courtauld Gallery.